GlaxoSmithKline Invests in Move from 'Made in China' to 'Discovered in China'

Earlier this year, GlaxoSmithKline (GSK) announced it would invest $40 million to establish a neurological R&D center in Shanghai’s Zhangjiang Hi-Tech Park (see story). GSK is now even more committed to its China R&D efforts: the company says it will spend $100 million by the end of 2008 on this same facility, which will have 1,000 staff members in place by the end of 2010.

The news came as GSK reviewed its neurological pipeline to analysts in New York. Glaxo said it will build its future around four pillars: neurology, vaccines, oncology and biopharmaceuticals.

In neurology, GSK will concentrate on neurological degeneration (Alzheimer's, Parkinson's disease) and neurological inflammation (multiple sclerosis). Moncef Slaoui, the Chairman of R&D for GSK, said the Shanghai facility will be a “one-stop shop” that does all the research on neurodegenerative drugs. Interestingly, Slaoui said the efforts of the Shanghai center will build on ongoing work in neural stem cell research and natural product compound libraries, which presumably means traditional Chinese medicines.

Slaoui was emphatic about the importance of China to GSK. "For us, China is not about outsourcing and cheap labor. We don't want to give them the crumbs. It's about different science. We will link our fate to their fate. Within five to ten years we will be moving from 'made in China' to discovered in China," he said. When GSK looked around the world to see where the best R&D talent was, “China came out on top, especially in oncology and neurology,” according to Slaoui.

In the New York presentation to analysts, GSK gave details of its neurological pipeline, which includes 25 innovative compounds in 13 different disease areas. Fifteen of the drug candidates offer new mechanisms of action.

Like other big pharmas, GSK has been restructuring as its pipeline failed to replace big-selling drugs that went off patent. In addition, Avandia, its drug for type 2 diabetes, has lost a large percentage of sales after studies showed the drug caused cardiovascular side effects. GSK has responded by outsourcing a greater amount of its manufacturing while attempting to streamline its R&D efforts, getting more and better results while curtailing its R&D spend.

Disclosure: none.

Comments

[Tom B]

Glad I sold last week. This is desperate; they are grasping at straws.

[User 130273]

This is great news. Not only does China has hugh resource of patients population, most of those have not been exposed to Western medicines and research, it also has a large talent pool, many of whom are eager to work for a big parma to make a difference. Given the impressive pipeline GSK has already had, I predict GSK stock will rebound to the peak in two years.

[Tom B]

"it also has a large talent pool, many of whom are eager to work for a big pharma to make a difference. "

You have a bit to learn about the Chinese talent pool. Let me give you a small hint: The talented people don't live in China. What does that leave?


"Given the impressive pipeline"

Care to elaborate?